Cash Converters sees competitive advantage

Cash Converters sees competitive advantage - The West Australian

Cash Converters expects to increase its short-term lending this financial year as smaller providers leave the industry due to regulatory changes.

New laws aimed at tightening responsible lending obligations for short-term loan providers will take effect from March next year.

The second-hand goods dealer and loan provider said the main impact of the legislation related to the definition of small amount credit contracts and the limits on fees and charges imposed in such contracts.

Managing Director Peter Cumins said the new laws were positive for Cash Converters as a significant proportion of the company's earnings were generated from the provision of short term credit.

"This legislation should provide Cash Converters with a competitive advantage in this market place as we expect that a number of smaller providers who do not have adequate systems and standards in place will leave the industry," Mr Cumins said in a statement.

Adopting a fee cap that allows lenders to recoup the significant establishment costs up front, showed that regulators understood that short term credit is costly to provide, he said.

The Perth-based company said it was looking at acquiring a number of new stores in Australia as well as planned greenfield locations.

"Cash Converters expects continued growth in its Australian and UK loan books over the coming financial year," Mr Cumins said.

He said the company was well positioned to drive further growth across all aspects of the business, based on strong first quarter earnings results for fiscal 2013.

The Australian personal loan book reached $72.1 million on November 13, up from $67.6 million on June 30.

Cash Converters expects a positive 12 months ahead, with the launch of its finance products into the UK market and its venture lending.

In the past two years, the company's online loan book has grown 126.7 per cent to $14.2 million, representing 11 per cent of the overall personal loan book.